Abstract
The short run interaction between capacity utilization and the price-cost margin is investigated. The findings indicate that the emergence of unplanned excess capacity will in most cases provoke an initial narrowing of the price-cost margin. However, the price-cost margin will often rise again when the excess capacity lasts for an extended time period. The total response is still likely to be a decrease of the price-cost margin.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.